Why Enterprise Mobile Messaging Is The Latest Startup Craze

02.14.14 In the News

By: Matt Weinberger | February 14, 2014 (Featured on CITEWorld)

Instant messaging and SMS have characterized communication among millennials for the better part of the last decade, and now, their tendrils have extended into the modern enterprise, with employees everywhere texting and Facebook Messaging each other. That’s great for employees, but it limits IT control over corporate communications, and it hinges on overlapping personal and professional lives.

That’s why there’s a growing market for workplace group messaging apps that aim to replicate the familiar IM experience, but with all the business-class management and integration with other enterprise tools that the IT department demands. It’s a simple idea, but apparently a promising one, at least if you look at how much money Silicon Valley venture capitalists have been pouring into the market: Just last month, both Cotap, a recent entrant into the market, closed a $10 million round of funding last month, and more established player TigerText got $21 million of its own. The same week, Yahoo bought startup Tomfoolery, whose app Anchor tried to duplicate the water-cooler experience.

The conventional wisdom is that the market is expanding so quickly right now because a few forces are converging, says Brad Brooks, CEO of TigerText. Smartphones are putting the social network and instant messaging in the hands of an older generation who otherwise wouldn’t bother, just as the generation that grew up with SMS and Gtalk is starting to get to work. Just as we saw with social collaboration and BYOD devices over the last several years, users have come to expect to be able to use the same tools in the workplace as they do at home.

“It’s the next logical step, after what you’ve seen on the consumer side,” says Brooks.

Lots of Alternatives

When it comes to building these applications, there’s a bizarre phenomenon at work: Developers are looking to replicate the design, simplicity, and overall experience of the consumer tools that their ideal customers are already familiar with. If you can’t, there’s no incentive for end-users to move away from the proven technologies that work — many companies, especially smaller ones, maintain an officially-unofficial usage of consumer apps like WhatsApp or plain old text messaging as the common means of communication.

The hard part is demonstrating the value of an enterprise messaging tool, says Jim Patterson, CEO of Cotap. It’s the exact same problem he saw in his past life as a product exec at Yammer, Patterson says: There’s so much momentum in doing things the established way that it’s hard to get over that hump.

When it comes to messaging, the obvious competitor is e-mail. But e-mail is often the province of so-called “knowledge workers,” of real value mainly to the back office. In libraries, coffee shops, and anywhere else where workers are not in front of a computer all day, text and IM is the smartphone-friendly mode of communication of choice. That means that coworkers need to befriend each other on their personal social networks, or else swap phone numbers, neither of which makes for a healthy or comfortable life-work balance.

It’s a lot easier when you empower those same front-office workers with a tool where they don’t need to know the phone number of the person they need to talk to. Just like Facebook Messenger, these apps give you a directory of people in the organization to send what Patterson calls a priority message, a little more urgent than e-mail and a lot more immediate. It’s a method that’s just as valuable to desk workers as it is to people behind a register, and can bring an organization together, Patterson says.

“The way we communicate in our personal life is how we’ll communicate at work,” Patterson says.

For IT, TigerText, Cotap, and their ilk promise central management, compliance with regulatory standards (TigerText is actually HIPAA-compliant, making it suitable for use in hospitals and doctors’ offices), and a focus on security. That’s something that SMS can’t match, no matter what.

But there’s a lot of competition here, and not just among the enterprise messaging developers themselves. There’s email, SMS, and consumer IM tools like Google Hangouts (formerly Gchat), WhatsApp, Snapchat, Secret, Facebook, AIM, and the like.

There are also broader collaboration tools that include messaging among a laundry list of features. There’s the much-ballyhooed Slack, which exited private beta this week and incorporates messaging as part of a broader productivity and organization tool. There’s Atlassian HipChat, which offers secure group messaging but started with a desktop rather than mobile focus and isn’t really designed for ad hoc exchanges among groups of workers. “It’s not how normal people communicate. It’s inherently not mobile,” says Cotap’s Patterson of HipChat.

Then there are the giants. Microsoft has had a variety of real-time messaging products over the years, and is currently looking to tighten integration between Yammer and its other Office-family products, like instant messaging and videoconferencing solution Lync.

Silicon Valley venture capitalists may disagree, as evidenced by these recent funding rounds, but it’s hard to see budget-conscious enterprises in the real world foregoing a complete stack that includes project management or productivity in favor of picking individual parts of that package individually. Cotap and TigerText argue that those solutions are more designed for a desktop experience than a mobile one, and may not scratch quite the same itch, but it’s going to be a tough sell to buyers who may not fully appreciate the distinction.